The political career of City Councilman Carl DeMaio has been built on his reputation as a successful businessman who knows what it takes to make governments run better.

He got his start in business in 1998 at the age of 23 when he maxed out a pair of credit cards so he could put on a “Budgeting and Planning for Government” conference to teach public officials about performance-based budgeting at a hotel in Crystal City, Virginia. Nine years later, he would sell the two companies he built from scratch that were now worth millions.

As he runs for San Diego mayor, DeMaio is touting his rags-to-riches story as evidence he has the financial acumen to fix what ails City Hall. Critics, including labor unions, say DeMaio’s business career deserves more scrutiny. They paint him as a Washington insider who used his connections to secure millions in government contracts and make himself wealthy.

DeMaio said he makes no apologies for how he made his money.

“I actually built a private think tank dedicated to improving government,” he said. “That’s my life’s work. If the unions want to try to distort that, I can’t control them. They can say what they want to say, but the reality is my passion is government reform, government improvement. Translating best practices from the private sector into government to cut costs, save money and improve performance. That’s a record that’s unassailable.”

Clare Crawford, executive director for the Center on Policy Initiatives, a nonprofit that advocates for workers, said DeMaio’s whole career is defined by the privatization agenda espoused by far-right politicians.

“He’s nothing but a snake-oil salesman who is all about taking taxpayer dollars and turning them over to private industry,” she said.

DeMaio’s career path began before he graduated from Georgetown University with a degree in international politics and business. In 1994, in his second year of college, he began working full-time for the Congressional Institute, a nonprofit organization with strong ties to Newt Gingrich that holds retreats for Republican members of Congress. DeMaio put together staff training on strategic planning and government oversight, among other things.

DeMaio branched out on his own four years later with the conference in Virginia. He said he thought if he could get 50 people to sign up it would be a success; 300 attended. That led to more and more conferences and to DeMaio incorporating The Performance Institute in 2000.

Soon he said private companies began asking if they could send employees to his conferences. In 2002, DeMaio launched American Strategic Management Institute for corporate executives. He said each of his companies had the same budgeting philosophies but said ASMI was more lucrative because he charged more.

“I realized I could make a lot more money on that,” DeMaio said. “The Performance Institute, really, if I broke even at the end of the year I was thrilled. Any overage I used for my real passion, which is the advocacy side.”

Not much is known about the finances of either company because they were private for-profit ventures. The U-T reported in 2005 that The Performance Institute had annual revenues of $8.5 million.

One aspect that can be quantified is the federal contracts that DeMaio received. He was able to get The Performance Institute on a special schedule for vendors that allow them to compete for contracts with each other rather than on the open market. Critics say that DeMaio’s connections to the Bush administration helped get him into that exclusive club.

From 2000 to 2007, the Performance Institute collected nearly $2.8 million in contracts from several federal agencies — including the departments of commerce, defense, agriculture and homeland security — according to usaspending.gov. About 12 percent, or $334,000, was listed as noncompetitive bids.

The most lucrative contract was for $499,000 with the General Services Administration in 2004.

The issue of DeMaio’s government contracts features prominently on the dirtydemaio.com website created by labor, and Assemblyman Nathan Fletcher, also a candidate for mayor, has used it to bludgeon DeMaio on the campaign trail.

“I do find it interesting that you made all your money off of government contracts and you say people shouldn’t have wages or salary out of line (with the private sector) when you made millions of dollars off of government,” Fletcher said during a February debate.

San Diego was a popular destination for conferences and so DeMaio eventually set up offices here and moved to the city in 2001.

DeMaio’s critics love to point out that DeMaio appeared before the San Diego City Council in February 2002 to present the panel with an award for running the most efficient city government in the state. The presentation was before the city’s pension problems came to light and led The New York Times in 2004 to dub San Diego “Enron by the Sea.”

DeMaio grew increasingly involved in city politics and created the San Diego Citizens’ Budget Project, which sought to improve the city’s budget process and management. He also openly criticized city leaders and briefly considered running for mayor after Dick Murphy resigned in 2005.

City officials accused DeMaio of using faulty numbers and dismissed him more often than not, but he continued to advocate for specific initiatives such as managed competition, pension reform and the strong mayor form of government. He also hasn’t been shy about spending his own money to advance those causes. He’s shelled out hundreds of thousands of dollars over the years, including $456,000 for his mayoral bid.

DeMaio, who was the sole owner, sold the companies on Sept. 14, 2007 — his 33rd birthday — to Thompson Publishing before he ran successfully for City Council the following year. Thompson Publishing filed for bankruptcy three years later, but both of his former companies continue to operate today.

Jess Durfee, head of the local Democratic Party, said the reliance of DeMaio’s business on government contracts doesn’t square with his politics.

“He was a Washington insider who managed to get somebody’s attention at the top level,” Durfee said. “They took our tax dollars, they turned them over to Carl DeMaio so he could come here to San Diego with literally hundreds of thousands of dollars in the bank that he can now turn around and use for his political endeavors. … We have every reason to be upset about that and cynical of a person who is so anti-tax that when he had the opportunity to reap the benefits from those tax dollars he jumped all over it.”

DeMaio said he’ll release his 2007 tax returns in September after the deal’s contractual obligations expire so the public will know exactly how much he made. He said the money gives him the freedom to advance issues without worrying about upsetting special interests.

“I’ve put my own funds into that effort because I believe in it and I believe that the only way we’re going to get change is if you do have someone who’s willing to step forward and … do the right thing and I’ve got the means to do the right thing,” he said.

The mayoral primary — which also includes District Attorney Bonnie Dumanis and Rep. Bob Filner as major candidates — is June 5.